Posts Tagged ‘Berkshire’

Singapore’s economy is projected to have expanded 2% in 2015, making it the slowest pace of growth in six years. Mkt was down 15%, worst in SE Asia. And Indonesia and M’sia have been the pits. Yet we did wotse than them

Investment guru Warren Buffett is headed for his worst year relative to the rest of the US stock market since 2009, with shares in his conglomerate Berkshire Hathaway down 11 per cent with two more trading days to go.

The underperformance comes in Mr Buffett’s Golden Anniversary year at the helm, when he told investors for the first time that they should judge his record based on Berkshire’s share price, rather than just the book value of the company, which had been his preferred yardstick for decades.

Mr Buffett urged them to make that judgment based on the long term, rather than on a single year, reflecting investing mentor Benjamin Graham’s view that the stock market may be a “weighing machine” in the long run, but in the short term it is a “voting machine”.

But in 2015, the market has been voting negatively on Berkshire’s prospects for weathering the decline in commodity prices, according to Jim Shanahan, analyst at Edward Jones.

Although Berkshire has no oil and gas subsidiaries, its railroad business transports oil, coal and agricultural products, and its manufacturing arm sells products to the shrinking oil industry. Weak results from Berkshire’s insurance divisions in the middle of the year may also be due to lower oil prices, Mr Shanahan said, since lower petrol prices mean drivers and truckers are on the road for longer and having more accidents.

“They are impacted by the weak resources sector and commodity prices in general,” he said.

Berkshire has also been hit by big declines in two of its largest stock market investments: American Express, which is down by 24 per cent this year; and IBM, which is down 13 per cent.

(Update on 2 May at 5.30pm: Another view http://www.economist.com/news/business-and-finance/21650309-future-worlds-sixth-largest-firm-unclear-berkshire-hathaways-meeting)

No big do like SG50, but then he doesn’t have a GE to fight.

Berkshire Hathaway Meeting On Saturday, more than 40,000 Berkshire Hathaway shareholders will descend on Omaha for the annual meeting of the company, which is celebrating its 50th anniversary. The gathering is known as Woodstock for Capitalists. Warren E. Buffett, Berkshire’s chairman and chief executive, and Charles T. Munger, its vice chairman, take questions for more than six hours, and their answers often make news.

Likely hot topics include the company’s recent investment in Kraft, its stakes in IBM and Coca-Cola, the debate around companies’ buying back their own shares and, a perennial favorite, succession planning.

As Parly is opening later today and what with most MPs elected via GRCs where the principle of using one’s vote to hold an MP accountable is badly diluted, I tot I should blog on shareholder democracy and its relationship to political democracy.

Shares without votes are not the conventional wisdom and make investors and corporate governance activists unhappy. Manchester United’s planned initial public offering in Singapore, where new shareholders may be offered a package of instruments that will entrench the Glazer family’s control, has attracted much criticism*. Many US companies break the one-share-one-vote principle (despite the US being called the home of shareholder democracy). Ford, Berkshire Hathaway, News Corporation, Google and LinkedIn, all have two classes of shares. Manchester United has just thought-up an alternative by “stapling” nonvoting preference shares to regular voting ones. Bit like GRCs.

Juz like MPs in GRCs, reduced voting power are a problem if managers (in politics think government, ministers or MPS) do stupid things or misbehave, or if takeovers arise. Two examples:

— Playboy, where Hugh Hefner, the founder of Playboy, who used his control of voting shares to take the company private in 2010 for less than the owner of rival Penthouse said it would offer.

If shareholders have faith in management, then the power to vote is irrelevant. Berkshire Hathaway’s class A and B shares trade on par. Shareholders there don’t care if they don’t have the vote. Likewise in S’pore politics once. In the late 1960s, and in 1970s, the people so trusted the PAP that they were were happy to have a one party state.

*Much unfair as investors are free to demand big discounts for getting non-voting preference shares that don’t pay fixed dividends and are not cumulative, making them like common shares without voting rights. No one is forcing the shares onto investors.